How To Automatically Re-invest Tbills (and how it works)
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- Опубліковано 30 бер 2023
- Tbills can be automatically rolled into a new Tbill at maturity. But how does that work when they're sold for different prices? Here's what you need to know.
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One thing to note here. When you for example set it up to reinvest 3 times. After it does the reinvest and you go back and revisit that information page for that bill, you’ll now see it says 2 times. So that is like a countdown counter. You can go back to it and bump it up to 5 or whatever every so often depending on your goals and what’s happening elsewhere.
I have spent hours trying to find the answer to a question you answered within two minutes. I’m now a loyal subscriber. Thank you!
Glad to have you! Welcome!
What you described is the logical way it would work, but it's helpful to have someone spell it out clearly, thanks!
Thank you so much for such a straightforward, understandable explanation!
Thanks for this video. I'm getting ready to purchase some t-bills next week & didn't know what would happen at rollover.
Your watch is awesome as the info in this video. Thanks
Thank you very much. I was wondering about the answer to this very question and couldn't find it anywhere.
Glad I could help, thanks for watching!
Me too😂. I googled the question and didn't get answers. Then searched UA-cam found your video. Here you go question answered. 😂 Thank you so much.
Fantastic - just EXACTLY the information I was looking for. Read on Treaury Direct but was still not clear.
5 min Friday did the trick!
Thanks a ton!👍🏽
I love to hear it! Glad it helped!
I view these You Tune videos as really Public Service that you and all “Tubers” take the time and effort to post. I have found an answer to almost everything I needed help on.
Much grateful appreciation!
From 2:55 to 3:07 of this video, you reference an amount of $3.28 from the original T-Bill, but I think that's wrong. I think you meant $3.51 from the original T-Bill, right? The screenshot in your video is the deposit from the SECOND T-Bill, right? Love the video!
Thank you! I have a 4 week T-Bill about to mature and I wasn't 100% on how the auto-reinvest worked. Of course I'm going to manually roll it into a 13-week T-Bill, but the 13 week Bills I'm setting on auto-reinvest.
were you able to change (the 4 wk into a 13 wk), for reinvesting?
no, you cannot change the original terms unless you direct it out on maturity
Can you change the rollover value [after] bill has been purchased?
Thanks.
If you automatically reinvest a 2yr note, you may wind up in a 5yr note. The 2yr note you bought might have been the last two years of a 5yr note silently reopened, in which case reinvestment goes into a 5yr note, even though it says you owned a 2yr note.
I know I can’t auto roll it into a different time period. The question I have is though, can I have the matured bill dump into a zero % c of i and in that same day (issue day) have a new scheduled tbill of another time length use the 0 c of I as the source of funds, or is my only recourse to have the source be my bank and let my maturing bill deposit to my bank? Meaning I’ll need to have the extra liquidity to cover while money is moving to and from?
So there is no option to compound the interest with T-Bills? Bonds? Any securities?
Thank for this Jay! Do you know if it's possible to auto re-invest in Vangard or Fidelity Tbills?
I’d assume it’s possible , but I’ve never bought Tbills either of those places so I’m not totally sure
no...brokers will not auto reinvest. as Treasury Direct because they make no money on these things. Therefore you will find you must look up your own cusip number on the aution to find your interest rate. But thats ok...its worth it if your into this. @@JayFairbrother
If I buy a 4 week and put it on auto-reinvest, is there a few days or potentially 1 week of downtime while you wait for the next auction for it to automatically purchase? If so, maybe it's wiser to put it into a longer terms T BILL, seeing that they yield about the same return?
Thank you so much for this info! Can I ask, what is the benefit of a T-bill instead of a CD?
I can add 1 advantage to a t-bill. No state tax just federal. A CD gets taxed on a federal and state level
You can buy T-bills that have a shorter duration than a CD and so not tie up your money as long. I ladder 4 week T-bills and use auto reinvest. You can easily cancel auto reinvest anytime.
Basically what the other two have said! You can buy T-Bills for a shorter duration than most CD's, and the interest you earn on T-bills isn't taxable at the state or local level like it would be with a CD.
T-bills are paying way more than CDs right now & you can access the cash within weeks if needed.
CD's cannot beat Treasury's. Inaddition, to get higher rates banks with higher CD rates require direct deposit. Treasury Direct is the way to go. Mutiple durations and lower investment rates. @@phineas737
Is there anyway to auto reinvest with what was earned that way it compounds? Or is it just the principle that will keep reinvesting?
no
How do I sell my TBills on treasury direct if I’ve already selected the option to automatically reinvest? Is there a window of time during the month that I have to go sell them, if I change my mind? Thank you!
Yes you can, but must do it 4-5 days before the auction day. Once it’s in the booking period, you’re locked out from changes. Where you set the number if reinvestments you’ll change it back to zero. Make sure you’ve set the place you want for where the funds will disperse to.
So the total net proceeds are $6.79, right? I suspect that buying bills is not more popular because the initial sense of getting something at a discount doesn't 'feel' like earning interest. But as I understand it, each time you roll that excess discount is deposited, and so the sense of earning interest is made more visceral.
if you invest 100, 100 keeps repeating itself, although you were discounted. the discount goes to your bank or whereever you stated and you mature for the refund and it starts all over. You end up with refunds and interest being sent back to your bank account
Personally it feels like they’ve set it up to be confusing on purpose, to keep the general public from becoming to involved. That’s the vibe I get. And it’s reflected here by all the comments of people who are unsure of so many of the facets of this.
Correct me if I’m wrong, but isn’t that 0.35% and not 3.5?
yeah if he bought $1000 at 4.51% shouldn't price have been $954.9?
It was only for 4 weeks, not a year, so it's 1/12 of the APR.
It’s not even 1/12th of the rate, as this is for only 28 days. You take the high rate from TD (not the investment rate), and get that down to a daily rate, and multiple by the number of days.
So when I place my order, is that for the face value I want?
So if I want to invest $100k in 4wk bills, I should enter either $100,400 or $100,500 in "amount"?
Yes, enter in the face value of the tbills you want to purchase, so $100k. You'll pay less up front, but will receive $100k after 4 weeks
if you want t invest 100 dollars...you can in Treasury Direct, but with the brokers min is 1000
What if the cost of the next t bill exceeds the purchase price + interest gained on the previous t bill? Will it deduct money from your specified bank account?
I found this at the TD site: To see the price of your reinvestment, after the auction for the new security has taken place:
Go to your TreasuryDirect account.
Choose Manage Direct.
Choose Pending Purchases and Reinvestments.
You may owe more for the new security than you are getting for your maturing security. This could happen if:
the price of your new security is more due to accrued interest or other factors
you have told us to withhold money to pay estimated taxes
Make sure funds are available in your bank account or C of I to cover the difference before the issue date.
If funds are not available to pay the difference, we will cancel the reinvestment and deposit the proceeds of the maturing security into your bank account or C of I.
that is mathematically impossible
The math is wrong. 4.51% of 1000 is not what you claim. What am I missing?
can I convert my IRA to a bond ladder
Depending on the brokerage you have your IRA at, you should be able to build a bond ladder inside of it if you want to
@@JayFairbrother You are so kind to reply Jay!
OM Goodness! I watched you explain this . I lost most of my life savings and now am 64 with no home and need to do this to have safe money to withdraw but also keep reinvesting into the Bond ladder until perhaps the stock market is healthy again
God bless you young man!!!!
It is with Fidelity. I hope someone there can help me do it ! I am recovering from a few concussions and am not as sharp as I once was . I was always frugal but not money intelligent
Your IRA is merely an envelope you put assets in. You can put anything in it as long as their is a custodian per IRS rules.Put Treasury Direct, CD's...on and on. Cheap custodians such as Interactive Brokers...etc. are self service sites.
The count-down timer is intrusive and annoying.
(Otherwise, good video: Thank you.)
not once you understand how to use a government site. It as fine as any other.